Saturday, March 05, 2011

An interview with Mike Hoskings, NewstalkZB, Thursday morning, about whether or not trimming Working For Families would go any way towards meeting the earthquake bill (starts at 20:41). Pieces were spliced into subsequent news bulletins and (to my frustration) I am still being described as a 'former ACT candidate'. It'll probably get carved into my gravestone.

These are grim times for Canterbury, and indeed for New Zealand. Our second largest city is devastated and the people of Christchurch are enduring the hardest of times.

We are now forced to make hard choices, to focus intensely on only the highest priorities – we need to face reality.

Our starting point is not good. Our government has been borrowing a massive $300 million per week simply to keep afloat. That’s almost $200 per week for each and every Kiwi household.

And now we have Christchurch to rebuild.

However it’s not just government that overspends – as a nation we have built up overseas debt of $162 billion, 85% of GDP.

We have seen the economic and social turmoil in the most highly indebted European countries. The future has arrived for them. Those in deep trouble were the countries with the highest current account deficits, the highest levels of overseas debt and the highest levels of government debt. If you need to know what the future holds on our present track, just look at the so-called PIIGS: Portugal, Ireland, Italy, Greece and Spain.

The reason we have so much wasteful, pointless and counterproductive government spending is that politicians have every incentive to spend more, and promise too much. As voters we encourage them.

The middle class want free childcare. Students want interest-free loans. Pensioners want pensions and gold cards. On and on it goes. Every interest group wants their own government department or agency. Helen Clark’s Labour government perfected the art of spending money on key interest groups to hold on to power at all cost.

We couldn’t afford that before the earthquakes and we absolutely cannot now. Government capital spending is going to increase as we rebuild Christchurch.

We must ensure now that the general good prevails over narrower self-interest. Government must live within a budget as tight as the budgets that ordinary households face.

Thursday, March 03, 2011

Because the PM has suggested making Working For Families less generous in an attempt to find the money needed to pay for the Christchurch recovery the Labour vote-buyer is once again in the news.

Earthquake or no earthquake many economists regard these sorts of family spending programmes as highly ineffective and inefficient. As a vehicle to reduce child poverty they often result in more workless homes. Yes, the In Work tax credit (one of four WFF tax credits) was intended to get more beneficiaries into the workforce but at the same time an evaluation showed more partnered mothers left the work force. ( And then the recession wiped out the increase in single parent employment too.) At the very low income end Family Tax Credits to benefit-dependent families tend to keep people on benefits because of the high marginal tax rates they produce and the incentive that higher benefit-packages bring.

When Labour widened the scope of eligibility for family assistance and re-named it WFF they virtually doubled the cost in the interim period. In 2005, as the opposition leader John Key called WFF "a giant welfare package". And at some point "communism by stealth". That is still true but in order to win the 2008 election he decided he could not risk undoing the scheme. There are over 400,000 families with dependent children - nearly four in five - receiving an average annual entitlement of between $6 and 7,000. Obviously, however the higher up the income scale we go, the lower the payments are. So cutting them back at the top end isn't going to save the government very much money. Not when they are talking about a $5 billion drop in tax revenue due to the loss of economic activity in Christchurch.

Other reasons why WFF is a bad business include the privilege/ penalty process. Childless individuals and couples resent having to pay for other people's choices. No wonder so many migrate. Some research shows that families with children actually accumulate more wealth over a lifetime though larger homes and more constrained life styles. So why is the taxpayer expected to add to that wealth?

Churning significant amounts of income involves dead-weight loss. It is inefficient. The bureaucracy wouldn't be needed if the money was left in someone's pocket in the first instance, rather than taking it and giving it back.

Some people believe that family assistance programmes increase fertility rates but any correlation is uneven across various countries. In fact groups like the Child Poverty Action Group claim NZ puts a shockingly small amount of GDP into family assistance yet we have one of the highest fertility rates in the developed world. Many European countries they admire - Sweden, Denmark and Norway for instance - all have lower rates than NZ.

In the final analysis WFF was a vote-buyer. With NZ's current somewhat dire situation National has to persuade people of the right course of action. What is needed is not necessarily what they want. People do understand this. Key has to convince then to vote using their heads and hearts, and not through their pockets. The programme Labour introduced in 2005 should go.

(The likes of Lianne Dalziel will protest that cuts to spending are the last thing Christchurch needs. So make a temporary exception for Christchurch. The precedent is already set with special spending packages and, last year, the DPB reforms were deferred for Christchurch beneficiaries.)

Wednesday, March 02, 2011

Here's a new idea, to me anyway. Various states of America require first time drink drivers to display what are called 'whiskey-plates' on their vehicles. This marks them for the police to pay special attention to and identifies them for the purposes of public reprobation I suppose. I can empathise with the arguments both for and against;

Washington has become the latest state to see a push for a so-called whiskey-plate law to combat drunk driving, a move defense lawyers and civil libertarians say can unfairly stigmatize offenders, and sometimes their families as well, reports the Wall Street Journal.

* The law would require first-time drunk drivers to replace their license plates with easy-to-spot tags that end with the uppercase letter "Z," a signal to police to pay close attention to the car. * Minnesota, an early adopter of such a law, uses the letter "W" -- hence the term "whiskey plate" -- on a plain white background. * Offenders in Washington would be required to display the special plates for three years after their driving privileges are restored.

Vanita Gupta, deputy legal director of the American Civil Liberties Union, said whiskey plates were part of a "trend of overcriminalization" in the United States. "These sorts of laws just create obstacles to offenders getting fresh starts and moving forward with their lives," she said.

A handful of other states have adopted similar laws.

* In Minnesota, certain drunk-driving offenders are required to attach special plates to their car for a year after their driving privileges are restored. * An earlier version of the Minnesota law was enacted in 1988. * Drunk-driving-related fatalities have fallen steadily since.

...Capitalism seeks to create wealth. Socialism seeks to buy votes by spending it. For years leftist tilting welfarism has destroyed New Zealand's chance of a nest-egg for this rainiest of days. Over-generous dollops of welfarism has spent up the nations inheritance for moments like these...

THE number of people on welfare benefits for more than a year has hit its highest since early 2002, with long-term recipients swelling by nearly 40 per cent since the global financial crisis.

Despite claims of skills and labour shortages, 349,806 people have been on Newstart Allowance for more than a year, according to Centrelink data for January, published by the Department of Education, Employment and Workplace Relations.

I stand to be corrected but surely this was to be expected after people who had been or would have been on the Parenting Payment - DPB equivalent - were required to either go onto or move to the Newstart Allowance.

Imagine if we did the same. Those parents with children 6 or older were moved onto the Unemployment Benefit. The long-term unemployed would increase.

But the journalist makes no mention of this. It seems a shallow analysis. Hence the conundrum of rising long-term unemployment set against falling unemployment.

Monday, February 28, 2011

As the days past last week I became less and less inclined to enter the welfare report debate. Primarily because of the timing, but running a close second to that, the quality of the debate. Here is just one example;

MEDIA RELEASE

Friday 22 February 2011

Celebrate Beneficiaries - The Heroes of the Recession

It is the government who is making bad life choices, not beneficiaries! In fact, Trevor McGlinchey from the NZ Council of Christian Social Services (NZCCSS) says beneficiaries are the heroes who are carrying the country through the recession.

NZCCSS Executive officer McGlinchey was speaking in response to today’s release of the third and final report from the government Welfare Working Group Report.

...“Last year’s Budget offered millions in tax assistance to those on mid to high incomes, many of whom pay relatively minimal tax because they know how to work the system. That leaves low income earners and beneficiaries to pay off the nation’s debts!”

So I apologise for encouraging people to get in and show support for reform and then failing to do so myself.

As it happens the report was overtaken by events and its opponents will be more frustrated about that than the group itself. There is good and bad in it. Now it awaits National to pick up the best and make it policy.

Sunday, February 27, 2011

"...Displaying alcohol in supermarkets should be treated in the same way as dirty movies are displayed in a video store, the Alcohol Reform Bill select committee was told yesterday.

Alcohol Action said the proposals adapted by the Government from a Law Commission report into alcohol reform did not go far enough.

Alcohol should not be easily accessible and should not be displayed at the front of stores or with other products such as fruit and vegetables, the group said yesterday.

"Supermarkets are treating alcohol like it's a commodity rather than a drug," spokeswoman Professor Jennie Connor said.

"It should be treated like dirty movies, they should be in one corner of the supermarket at the back..."

Utter unadulterated hysteria.

Have these cheerless naysayers ever taken a trip to a vineyard to observe the work, the craft and the dedication that goes onto producing wine? Have they no regard for the talent brought to the label design and marketing? The jobs provided to thousands of harvesters, bottlers, distributors, and on-sellers? Have they ever entered a really first class cellar and felt the romance of wine bottled and aged for many years?

How dreadfully insulting to compare wine to "dirty movies" (and even dirty movies have a place, like them or not.)

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About Me

Lindsay Mitchell has been researching and commenting on welfare since 2001. Many of her articles have been published in mainstream media and she has appeared on radio,tv and before select committees discussing issues relating to welfare. Lindsay is also an artist who works under commission and exhibits at Wellington, New Zealand, galleries.